Adele Sets A Record For Downloads

Who says that downloads are dead?

That's not the case for Adele's new song "Hello," which set the record for most downloads sold in a weekin the US  at 1.11 million. It's the first song ever to sell that many in week since Nielsen began tracking digital and physical singles in 1991.

Not only that, the song has set records for downloads, streams and airplay in the UK and Europe, so the girl must be doing something right.

Plus the song is already #1 in the US and 14 other countries around the world.

One of the more interesting facts about Adele's past and current success is that she continues to defy the punditry of music industry analysts who insist that physical and download sales will never sell in great numbers again.

Adele's last album 21 sold in excess of 28 million worldwide, while those in the business said that there would never be another album that would ever sell more than 2 to 3 million again.

The same was said for downloads, but yet "Hello" is being purchased in record numbers at the same time as it's being listened for free online and on radio.

Many claim that Adele's popularity is the fact that she's the "anti-Lady Gaga/Beyonce/Ariana Grande, etc", but she's also managed to cross over from the usual teens that buy pop music to a much older crowd as well. Sometimes lack of controversy works in your favor.

It should be interesting to see how well her new album 25 sells when it's released.

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Big Changes In Music Sales This Year So Far

Nielsen's mid-year music sales report is out and a lot has changed in a mere 6 months. Here are some of the highlights.

• On-demand streaming from services like Spotify is up 92.4% over last year! Over 135 billion songs have been streamed so far this year. Yes, this streaming thing is definitely catching on. 

• Vinyl sales continue to rise at an ever greater rate, up 38% over last year. Vinyl albums now comprise almost 9% of all album sales.

• Digital track download sales are down 10.4% from last year. The bloom is off the rose.

• Digital album sales are virtually flat though, which is good news considering that last year they were down 10%.

• If you add in the new ways of looking at albums in the digital domain (track equivalent albums = 10 and stream equivalent albums = 1500), total album sales are actually up 14% over last year at this time.

• CD sales are down 10%, which is decreasing at a much slower rate that anticipated and slower than we've seen in previous years.

• Physical album sales are down at traditional big-box retail, but up 0.6% at indie music stores, and up a giant 18% at non-traditional vendors like online, at the venue, and direct-to-consumer.

What do these numbers prove? Music is still not only alive and well, but demand and consumption is growing. What we don't see in the Nielsen report is the revenue numbers, and that's where the actual tale is told. We have to wait for the end of the year for that.

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Who's Buying Music Today vs 10 Years Ago

A recent survey by MusicWatch looked at the demographics of CD and digital music buyers back in 2004 and compared them to 2014. What they found shouldn't be too surprising, because it's almost exactly what you'd expect.

• In 2004, the largest demo of CD buyers was age 36 to 50 at 25% (and it's 26% in 2014).
• In 2014, the largest demographic of CD buyers were age 50+ at almost 35%.

• In 2004, ages 13 to 17 purchased the most digital downloads at 25%, followed by ages 36 to 50 at 24%.
• In 2014, ages 36 to 50 purchase the most at 26%. Ages 18 to 25 was second at 23%.

• Surprisingly enough, both in 2004 and 2014, women purchased more CDs than men by a roughly 5% margin.

• That flipped around for digital music though, as men purchased far more digital music in 2004 by a 60 to 40% margin. Today women buy more than men by 53 to 47%.

Of course, all this may be moot in a few years as both CDs and digital downloads face ever diminished sales. It's still a huge part of the business in terms of revenue, but the writing is on the wall that streaming music will be the dominant distribution method for some time to come unless a new distribution technology is introduced that takes the industry by storm.

An Artist's Look At Music Delivery Format Pros And Cons

In the recent past, there have always been multiple containers (a container is the way the music is packaged for distribution) of music that an artist had available for sale. First there were vinyl singles and vinyl albums, then vinyl albums and cassettes, then CDs and cassettes, then digital downloads and CDs, and now we can add streaming digital music to the list. With the recent resurgence of vinyl, an artist has four container options for distribution of his or her work. Here's an excerpt from my Music 4.0: A Survival Guide For Making Music In The Internet Age that takes a look at the pros and cons of each.

As you can see from the chart above, each of the current delivery methods has an assortment of pros and cons. This is not to say that one container is better than another in our current music world, but it helps to be aware of the benefits and disadvantages of each.

You can read additional excerpt from Music 4.0 and my other books on the excerpts section of bobbyowsinski.com.

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Streaming Up And Downloads Down This Year So Far

Soundscan's sales numbers are out and it's no surprise that the same trends that we saw at the end of last year continue, only more so. Digital and physical sales were down while streaming was way up, and the hits are doing better than ever compared with the bottom of the charts.

Here's a look at some of the most important numbers:

• Digital Sales - down 13.3%
• CD Sales - down 21% compared to this time last year
• Interactive Streaming - up 35%
• Streaming Royalty Rate - up to $.005 from $.00375 last year

Even though sales are down, streaming royalties seems to be making up for the decline, which is something that was predicted would happen. In fact, if this trend continues, music industry revenue could actually rise slightly by the end of the year.

Albums continue to take a hit as well, with digital albums down by 14.2%. In fact, all genres of music posted a decline except for electronic music, which posted a modest 2.7% increase in sales.

The music business continues to evolve and the switch to streaming continues at an increased rate as consumers warm to having access to, rather than owning, music. With several new streaming services about to be introduced, it will be interesting to see if the trend accelerates even more.

The Numbers Are In: Should The Music Industry Be Worried?

Billboard Magazine recently posted the Nielsen Soundscan year-end 2013 music sales numbers, and while they may not correspond exactly with the upcoming figures from the RIAA (Recording Industry Association of America) or IFPI (International Federation of the Phonograph Industry), I don’t think they’re far off the mark. I’m sure music execs everywhere are looking at the stats and wringing their hands, and in some ways, they should be, because it’s the first year since iTunes was introduced that digital music has suffered a decline.

In what should be a huge red flag for the industry, 2013 digital track sales fell 5.7% from 1.34 billion units to 1.26 billion. Soundscan hasn’t yet released their streaming numbers for the year, but it should be clear to everyone that streaming is the reason for the downturn. In fact, it’s been widely noted that the digital download sales decline has been offset by the rise in streaming income, which we should see quantified when the numbers are made available.

Perhaps a larger problem is that the album, the cash cow of the industry (although less so than ever), has seen its sales decline for yet another year. Album sales for 2014 dipped to 289.4 million units, an 8.4% reduction from the prior year, although digital album sales fell a nominal 0.1% to 117.6 units from the previous year’s 117.7 million.

We’re in the era of the single song sale, as albums mean less and less to today’s consumers. It’s a different time where the attention span is much shorter, multitasking abounds, and there are more media choices than ever, which is less than ideal conditions for a medium that requires a long time commitment. Albums won’t die, but hopefully they’ll be altered for the times, with fewer songs and less running time. That’s not going to bring the format back to prominence, but it might slow its decline. This is one time where quality trumps quantity for sure. Read more on Forbes.

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US Individual Track Sales Down, But Why?

After a gangbuster growth rate for ten years, US individual music track sales are down 2% for the year through April 14th according to Nielsen SoundScan. While this may be a surprising stat, what's even more surprising is that digital album sales are actually up 9% for the year.

While digital track download sales had gone negative for a time in 2010, they actually ended the year in the positive. While this might happen again in 2013, it also might be an indication that the streaming music revolution is beginning to take hold, as more and more consumers discover the beauty of access or ownership. That might explain track sales, it doesn't adequately describe why album sales have increased though.

The two major theories on the subject are that more and more people are using Apple's Complete My Album feature to fill in their missing album tracks. The second theory is that both Amazon and Google Play are gaining market share from iTunes, mostly because of deep discounting, especially on albums. If I had to make a choice, I'd say the reason lies more in the fact that albums have been discounted rather than people trying to fill in those lost tracks that they never listen to anyway.

We'll have to see if either of these sales stats are temporary or long-term, but the only thing that will be a surprise is if album sales continue at their current pace. If they do, the bigger marketing question will remain, why?

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The Upcoming Subscription War

There's no doubt that we're headed for a battle that will be nearly as epic as any in past music business history. As the world slowly but surely shifts from a download "ownership" model to a rental "access" model, the parameters that we know today regarding the online and offline music business will be redrawn. It may happen incredibly fast, or it could happen so slowly that you hardly notice it, and that's what makes how the whole thing plays out so interesting.

Let's take the big premise first, that subscription will solve the music industry's problems and restore the revenues to what they once where. The dream all along of record label execs and insiders is to have 50 million US subscribers each pay $10 a month, which would give the listeners access to all the music they can listen to. That would generate around $6 billion a year, which is okay when you compare that the total US industry revenue in 2012 was $5.35 billion. What is usually forgotten is that the entire $10 isn't going to the record labels, it's going to be split with the service provider and the publisher. I'm not sure what the split would end up being between them, but if you put it at 50%, you get $3 billion. That could end up just offsetting the decline in download and CD sales, and basically it a wash. I don't see how that restores the industry to its former glory even if it does increase a little.

The labels are smart when it comes to subscription though, and they don't want to get caught in the Apple trap again where there's one big dog distributor that controls the supply chain. That's why they're eager to make deals with any number of potential or real competitors, like Google Play, the new Beats offering, Amazon, whomever. One thing's for sure, there's going to be a lot of alternatives for listeners to choose from in the future.

And what does that mean for Apple? There's a big change a-comin', because don't forget that Apple's fortunes aren't so much tied to the software that is iTunes as much as it's a vehicle for people to buy their hardware. Thanks to the reality of music streaming, there won't be a need for any new and improved dedicated hardware like the iPod soon, thank you very much. That means they need a new plan going forward if they want to control the music world as they have.

Amazon is a little different. Their model has never been tied to hardware, although the Kindle was used to kick start the ebook market for them. That said, they don't really care what hardware you use, as long as you buy from them. That means they're a lot less vulnerable to any forthcoming change. They also have the infrastructure in place to implement a subscription service in a flash.

Google may be caught in the middle here. They want to do some big subscription things with a combination of YouTube and Google Play and can easily roll that out. The problem is that they're not good at charging end users for their services. YouTube is a huge music discovery engine, but primarily because it's free. Try charging people and watch what happens.

That leaves Spotify, Deezer, Rhapsody, Rdio, et al. Some of these will fall by the wayside, some will stick around, but most likely none will grab a larger market share than the biggies mentioned above.

So what's the answer? If I had to guess I'd say the winner will be the best bundler. When you buy a device you get the service thrown in (or least for a period of time). That would put Apple on top, but don't discout Google (who owns Motorola) or Samsung, Google or even Beats. The phone is the center of everyone's lives right now and he who owns mobile owns the music business.

All we know for sure is that two years from now the industry could look completely different. And I can't wait for that day.

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Interested in the Music 3.0 archives? Buy The Music 3.0 Guide To Social Media. The best of over 800 posts.

You should follow me on Twitter for daily news and updates on production and the music business.

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Stars Make The Big Mistake Of Not Going Digital

It seemed like a good idea at the time to be a holdout from going digital, but now it looks like AC/DC and Kid Rock are paying the price. Two of the longest digital holdouts are meeting with only modest digital download success now that consumers have started to tip toward streaming, and it looks like the window for some real revenue from digital might have passed them by.

Take AC/DC. While the video of the band's Live At River Plate hit #1, their first album (of the same name) debuted at only #66 on the iTunes store. That said, since the band recently released their entire catalog to iTunes, 13 of their songs have entered the 200 song Hot Digital Songs chart. This sounds like a lot until you see that the classic "Back In Black" is the biggest seller at only 68k, and the album of the same album sold only 15k this week, which is a drop in the bucket to the big sellers of the day. You have to think that if they had done this any time in last 3 years that they may have had more success.

Kid Rock's first digital album Rebel Soul is doing better, debuting at #5 and selling 146k total copies, but only 57k of those are digital. The problem is that amount is less than his the debuts of his previous 3 albums, even with the digital element now attached. The interesting thing here is that KR really missed out on the digital scene by waiting, proven by a cover band called Rock Heroes selling 1,647,000 digital copies of his 2007 hit "All Night Long," which would've meant about $330k of revenue that he missed out on right there.

Once again, this proves the point that you can't sit on the sidelines while technology passes you by, especially in music. Both Kid Rock and AC/DC didn't do themselves any favors by doing so, although they probably thought they did the right thing at the time. Remember the mantra; your music is your marketing. The more that's out there, the better off you are, even if you're AC/DC.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

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What It Takes To Earn Minimun Wage

Here are some depressing stats if you're an artist. In order for a solo artist to earn the US monthly minimum wage of $1,160, this is the quantity of music you must sell:

• Spotify streams - 4, 053,110

• Last.FM streams - 1,546,667

• Rhapsody streams - 849,817

• iTunes Tracks - ($0.99) - 12,399

• iTunes Albums ($9.99) - 1,229

• Retail Album CDs ($9.99) - 1,161

The list sure makes CD sales look good, doesn't it?

In actuality, if you think you're going to make a career in music as an artist, it's best to get it out of your mind right now that the bulk of your income will be from music sales of any type. It's never been that way before in the business, and it certainly isn't that way now. In fact, 95% of the money that most major artists make come from sources other than music sales, like publishing, touring, merch and sponsorship.

Remember, as stated over and over in Music 3.0, your music is your marketing. It enhances your ability to make money in other ways.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

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The World Of Online Music

I just had a good look at a report from GrovoLabs called The World Of Online Music that was a real eye-opener. The report was from January, but shouldn't be too far out of date a couple months down the line. Here's what it says:

There are a lot of music services around the world. Some cover a lot more countries than others. The big ones are:

Emusic - 27 countries
iTunes - 23
YouTube - 21
Vodafone - 17
7Digital - 16
Spotify - 12
Last.FM - 10
Amazon - 6
Deezer - 4
Pandora - 1
Rhapsody - 1

What's interesting here is that Pandora and Rhapsody still only cover the United States, while Amazon is still very limited as a distributor.

Some other things that came from the study are:

• 16.5% of all Internet users in the US purchase digital music.
• Globally, 17% of all users legally download music.
• More than 3 times as many people regularly visit streaming music sites rather than download sites.
• iTunes now has over 20 million tracks for sale, but Spotify has 15 million and Rdio has 12 million. Grooveshark can access 15 million as well.

What's the upshot? The tipping point from download to streaming is coming, but it might not be as near as predicted. That said, "Why own when you can rent?", will eventually become the motto of most online music consumers.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

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Sony Caves To Artists In Class Action Suit

If you've read this blog much, you know that I've been keeping you up to date on the Eminem v. Universal lawsuit all the way along. The suit, which was eventually won by Eminem's production company FBT, was significant because it changed the way the music industry values a digital download.

The record labels considered a download sale to be just like a CD sale and therefore subject to the same royalty rate, which could be anywhere from 12 to 20 percent. FBT contended that a download was in fact, NOT a sale, and really was a license, which was subject to a much higher royalty rate of 50%. When HBC/Eminem won, it was predicted that there'd be a flood of classic artists suing their record labels. Sure enough, that's what happened, with a number of acts including The Allman Brothers, Cheap Trick and The Youngbloods filing a class-action suit right away.

Now it's been reported that Sony Music has filed a motion to settle with these acts, paying around $8 million and raising the royalty rate 3% in most cases, and 4.7% in the case of The Youngbloods. If this is approved, artists who have had at least 28,500 downloads on iTunes will be eligible. Ironically, many acts are choosing not to settle or be part of this action, preferring to file their own suit to get an even better deal.

This might seem like a win for the artists, but consider this. 8 million bucks is a drop in the bucket to a major label, and raising the royalty rate isn't that great either. The digital download cat has been out of the bag for sometime, which means that there won't be that many download sales forthcoming, and the next music distribution frontier is subscription, which pays even worse.

Yes, this seems like a victory, but at the end of the day the artists only received what will amount to a little bump. This isn't the only suit that's ongoing however, and it will be interesting to see if any of the others have endings along these same lines.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

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How Much Does An Artist Really Make?

Here's an interesting chart from informationisbeautiful.net that shows how many units (either physical or digital) an artist has to sell in order to make the minimum wage of $1,160 per month. In other words, this is what you have to sell just to make the same amount as flipping burgers at Micky D's.

There are quite of few of the following numbers that I have a problem with, most notably the album download and retail CD figures (they're lower than they should be), but the general gist of the graphic is correct, which is that you have to sell a massive amount of digital product for it to amount to anything.

Keep in mind that most artists make their income from a combination of all the categories on the chart, so  the end result is not quite as dire as the graphic makes it seem.

Click here for the original post.

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You should follow me on Twitter for daily news and updates on production and the music business.

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New Survey Shows Teens Actually Paying For Music

It's common knowledge that teens don't and won't pay for music, and place zero value on it. Or so we've been erroneously told, it seems.

A new survey by the teen-targeted virtual world Habbo surveyed 47,000 teens from 33 countries about their listening and purchasing habits, and the results fly in the face of music industry wisdom. Among the data includes:

  -- only 33% of teens prefer to download music without paying for it
  -- Teens in Chile are least likely to pay for music, with 51% downloading music without paying
  -- only 21% of US and 20% of UK teens report downloading music without paying
  -- only 21% of teens prefer purchasing downloaded music
  -- 37% of Australian teens say they favor paying to download

Now comes the surprising part:
  -- 20% of teens polled report buying CDs
  -- Teens in Sweden (40%), Germany (37%) and Denmark (35%) are most likely to buy a CD, versus 14% of teens surveyed in the US

What influences the type of music teenagers listen to?
  -- Radio and TV are still the dominant music taste makers. 38% of teens take music recommendations from these traditional channels
  -- 28% are influenced by what their friends are listening to and recommending
  -- 18% are influenced by what is in the music charts
  -- Only 9% are influenced by magazines and what they read online

The study also shows that today’s teenager is connected with friends online and values their social recommendation:
- 78% of teens use social networks to share recommendations
- Only 23% never use social networks to recommend music to friends
- Finnish teens are the most likely to share recommendations (88%)
- German (51%), Swiss (46%) and Austrian (45%) teens are the least likely to use social networks to recommend

The music industry is pretty fast to claim that all their problems is the result of illegal downloads, but as we all know (and this survey suggests), there's a lot more to it than that.

Read the original article at Habbo's parent company blog at sulake.com.

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Top 13 Things Discovered In The New Digital World

If you've never read Paul Resnikoff's Digital Music News, then it's something worth checking out. Paul's a great writer and reporter with some pretty good industry sources, so he always has the latest details on the digital music world's breaking news. He's insightful too, and often offers an extremely cogent insight on the the digital music world's troubling trends as he sees them. Here's a post from the other day that I thought was particularly on the mark.
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The Top 13 Things We've Discovered In the Digital New World...

Here are the top lessons the music industry has 'discovered' in the early days of this 'digital new world'.  

(1) It's really, really hard to sell music to fans online. Whether the iTunes Store or Rdio, getting fans to allocate even modest amounts of their income to music is an extremely difficult challenge. Competing with free has proven a hard game indeed.

(2) But it's not as hard to engage fans, as long as they're not paying. In fact, they love music more than ever! Welcome to the Digital New World riddle.

(3) DRM is an awful idea, at least for downloads. Other platforms like YouTube, subscription services, and streaming radio are still fair game.

(4) Sound quality doesn't matter. At least to most fans. That would explain why few have complaints with MP3s, though Jimmy Iovine and T. Bone Burnett have serious problems with the fidelity freefall.

(5) An official release date means very little. Almost everything is leaked in advance, and even half-baked copies find their way online long before a scheduled drop. 

(6) Licensing content is a great way to squander an investment. VCs are largely out of this game, though others are still slogging through horrific licensing processes and nosebleed costs (ie, Spotify).  Or, running the red light and dealing with the consequences (ie, Grooveshark).

(7) Email addresses are more important than Facebook, Twitter and MySpace connections. Or, at least that's what pros like Ian Rogers (of Topspin) are saying. Sounds a bit counterintuitive, but according to what rulebook?

(8) If you're hot right now, just wait 5 minutes. Attention spans are shorter than ever, and fan relationships with bands can be fickle and short-lived. 

(9) Direct-to-fan distribution is a seriously double-edged sword. Sure, you can create powerful direct-to-fan relationships, but so can millions of other bands. Welcome to the horrific content glut that results from digital democracy.

(10) There's an app for that. Good luck selling ringtones or OTA downloads on a mobile device. But those that understand app culture have done well, including Tapulous, Smule, and T-Pain. 

(11) 360-degree deals can really kill your musical mojo. We're just starting to see some of the problems associated with these label land grabs. Smart artists like Arcade Fire and Metric are rolling their own multi-national deals, though sometimes the 360-degree paycheck is worth the handcuffs.

(12) Digital disruption is not just for record labels. Nearly every other sector - including publishing and touring - are also trudging through tough transitions.

(13) The music is still the most important thing. Artists over-dialed into their Twitter followings and play counts are often missing the most important part of the equation.

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9 Reasons Why People Don't Buy Downloads

We all have our theories as to why consumers buy, or don't buy, digital downloads. Most of us are guessing or going by a gut feeling, but occasionally we hear from someone that has some real data that confirms our assumptions. At the Digital Music Forum West in Los Angeles last Wednesday, NPD Group analyst Russ Crupnick gave these 9 reasons during his presentation:

1) People listen to AM/FM radio instead

2) They prefer to own the physical CD

3) They're spending less on entertainment

4) They don't listen to music on their computer

5) They're satisfied with their collection

6) They don't spend as much time listening to music

7) They don't own a portable digital music player

8) They don't feel comfortable using their credit card online

9) They don't think that downloads are a good value, their afraid of spyware/viruses, downloads are too expensive, or they have no time to learn about new music (that seems like 4 reasons to me).

All that being said, Crupnick also noted that among the 13-25 set, price and access to shared music files rank higher than the rest of the population.

There's not much mystery here except for the order (number 2 seems too high to me), but now there seems to be some quantifiable evidence to what we all thought.

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Study Predicts Huge Music Industry Growth

Since it seems like I'm always the bearer of bad news, here's something that I hope will be a bit more upbeat. A new study by IE Market Research called the "Global Digital Music Forecast" predicts that music retail revenues will increase to $32.5 billion by the end of 2014.

Now considering that the global total music sales fell by by 7 percent last year to $17 billion, these seems a tad optimistic to me, but I don't write reports for Goldman Sachs either.

How did they come up with these numbers? It seems that there are now 832 million paid users of digital music worldwide, and the study says that number is expected to almost double to 1.555 billion in 2014. As a result, digital music revenues will increse from a current $4.82 billion to $21.3 billion at the end of 2014.

Where are these users coming from? Can it be that Chinese music lovers will suddenly honor international copyright law? Will all the P2P users suddenly get religion and buy a subscription instead?

It seems that subscription will lead the way on both online and mobile music channels according to the studio, although the number of music users downloading their music will also increase from 507 million in 2009 to over 1 billion in 2013.

Some other numbers from the study:

• There are now 105.4 million paid users of digital music in North America and that number is expected to grow to 227.2 million in 2014.
• Online music download users in North America will increase dramatically from 50.4 million in 2009 to 135.0 million in 2014.
• Digital music retail revenues in North America are expected to reach $11.86 billion in 2014.

While I think that all of these predictions are wildly optimistic, I do hope they come to pass. It can only lead to a much healthier music industry and a better lot for everyone involved in it.

You can read more about the the study here.

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